One million workers could still be on furlough when scheme ends, think tank warns

With just weeks left before the scheme closes, official figures show up to 1.7 million people were still furloughed in August

A million workers could still be on furlough when the scheme closes later this month, a think tank has warned, raising concerns that the labour market is still “far from full health”.

The Resolution Foundation has said that if furlough rates continue to fall at the pace they have over the summer, by 30 September when the scheme comes to an end, there would be one million people still on partial or full furlough.

While the majority of these workers should be able to return to their previous jobs, and particularly those on partial furlough because they are already back working, the organisation said this could still leave hundreds of thousands more workers needing to find new jobs in October.

Yesterday (23 September), the Office for National Statistics (ONS) released data that showed the proportion of businesses’ workforces reported to be on full or partial furlough remained broadly unchanged throughout August 2021. 

According to the ONS, between 1.3 and 1.7 million people were on full or partial furlough, with the data indicating that there was a higher proportion of partially furloughed than fully furloughed employees.

The data showed 2 per cent of the workforce – between 300,000 to 800,000 people – were still fully furloughed.

Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter

Dan Tomlinson, senior economist at the Resolution Foundation, said that seeing more than a million employees still on the jobs retention scheme just one month before it closes showed that the labour market was “still far from full health”.

“The furlough scheme has been a living standards lifeline during the pandemic,” he stated,  adding that the end of it will mean a “testing period in the labour market” as more people, particularly older workers, look for new jobs.

However, the Resolution Foundation’s warning comes as separate figures show demand for workers has reached a new record high this month. 

A study of job adverts, conducted by the Recruitment and Employment Confederation (REC) as part of its Jobs Recovery Tracker, found that there were 1.9 million active listings in the week of 13-19 September. 

This is a new high for the tracker, which started collecting data in January 2020: the last time vacancies peaked was in December 2020 when the total hit 1.7 million.

During last week alone, the REC found that there were 223,000 new job adverts posted: the second-highest weekly figure since data collection began.

It also noted that there was a significant increase in adverts for education roles as students returned to classrooms in September, with support roles recording the highest increases in active job postings. 

School secretaries increased by 17.6 per cent; school midday and crossing patrol occupations increased by 16.4 per cent; educational support assistants by 9.8 per cent; and caretakers by 9.6 per cent during the week of 13-19 September.

Neil Carberry, chief executive of the REC, said the rise in job postings was good news, but that there was still “a real chance” that a shortage of available workers could slow the recovery.

“Labour shortages and the related recruitment difficulties put constraints on the economy, restricting output growth and innovation, so it’s vital we solve them quickly,” he said, adding that industry experts and government departments need to work together to solve the crisis. 

Employers also needed to “do their part” by improving workforce planning and focusing on improved conditions and facilities, not just pay, as ways to attract and retain staff, Carberry said.

Matt Mee, director of workforce intelligence at Emsi Burning Glass, said the labour market was still in an odd position. “Employers are going to have to work harder to fill their vacancies if they are to survive and thrive,” he said.

This could mean raising salaries, charting clearer and better career progressions for employees, looking for talent pools in other areas, and seeking to create better and more flexible working conditions, Mee added.